U.S. Housing Inventory Has Dried Up, Prices Soar

CoreLogic Inc.’s (CLGX) home price index rose faster than expected in June, reflecting continued strong demand, while supply fell to a 30-year low.

On Tuesday, CoreLogic released the CoreLogic Home Price Index and HPI Forecast for June 2017, which showed that home prices rose strongly both year over year and month over month. Irvine, California-based CoreLogic is a property information, analytics and data-enabled solutions provider.

In June 2017, home prices nationally increased by 6.7 percent from the same period last year. On a month-over-month basis, home prices increased by 1.1 percent compared with May 2017.

Looking ahead, the CoreLogic HPI Forecast indicates that home prices will increase by 5.2 percent on a year-over-year basis from June 2017 to June 2018, and increase by 0.6 percent on a month-over-month basis from June 2017 to July 2017.

“The growth in sales is slowing down, and this is not due to lack of affordability, but rather a lack of inventory. As of Q2 2017, the unsold inventory as a share of all households is 1.9 percent, which is the lowest Q2 reading in over 30 years,” Frank Nothaft, chief economist for CoreLogic said.

Home prices are rising higher, up almost 50 percent since the trough in March 2011. According to Core Logic, affordability is rapidly deteriorating nationally, and especially in some key markets such as Denver, Houston, Miami and Washington.

Frank Martell, president and CEO of CoreLogic said, “While low mortgage rates are keeping the market affordable from a monthly payment perspective, affordability will likely become a much bigger challenge in the years ahead until the industry resolves the housing supply challenge.”

CoreLogic noted that of the nation’s ten largest metropolitan areas by population, four were overvalued in June. These four metros include Denver-Aurora-Lakewood in Colorado; Houston-The Woodlands-Sugar Land in Texas; Miami-Miami Beach-Kendall in Florida; and Washington-Arlington-Alexandria in Washington D.C-Virginia-Maryland-West Virginia.

The CoreLogic Market Conditions Indicators or MCI defines an overvalued market as one in which home prices are at least 10 percent higher than the long-term, sustainable level.

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